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Old August 4th, 2012 #1
Alex Linder
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Default The Eurozone

[...]

The eurozone is in a permanent state of crisis. It is not going to get out of this crisis anytime soon. The Greek government may pull out of the
eurozone this year. This would be good for the eurozone. That morally bankrupt government should never have been allowed to join.

As for Spain and Italy, they may also depart sometime in the next 12 months. What will keep them in is ECB inflation. The ECB will create digital euros and buy the IOUs from these two economically bankrupt nations.

If the ECB can persuade Angela Merkel to persuade the German parliament to fork over a few hundred billion extra euros to keep the governments of Italy and Spain from defaulting on the debts they cannot otherwise pay, the day of reckoning can be delayed.

If Italy and Spain default, this will take down many French banks. If the ECB refuses to bail out France, which will in turn bail out large French banks, France will leave the eurozone and restore to its central bank the right to create fiat money.

That will leave Germany, Finland, the Netherlands, and 10 other nations to keep the euro alive.

Germany would then probably go back to the Bundesbank and the deutschmark. Why stay in a shrunken eurozone?

All this will take time. It will be accompanied by assurances from inside eurozone senior circles that none of this is really happening, that the eurozone will remain intact, and that rumors to the contrary are exaggerated.

As nations depart, representatives of those nations that still remain will say that the recent departure of the others was an aberration. "Nothing to it. Trust us."

Mario Draghi, formerly of Goldman Sachs and presently the head of the ECB, assured guests at a pre-Olympics gathering of high officials that the ECB will do whatever it takes to hold the eurozone together. That was Wednesday evening. That off-the-cuff remark mobilized investors on Thursday, which pushed up world stock markets. No one asked Draghi what he had in mind that was new. No one asked to hear a summary of his new plan. The other plans had been vague. He has no new plan. He has one vote on the board of an institution that can legally create money out of nothing and buy IOUs with it.

So, it is up to Merkel and Draghi to work out a plan to unify the 17-member eurozone into a national government with a common fiscal program.

Here is the bone of contention. Draghi wants a unified government whose IOUs are issued by all 17 members. This means that Germany and the Netherlands must co-sign the notes issued by the central government. Merkel says she will never consent to this. She has repeatedly made assurances like this. But she has broken them whenever the banking system looked vulnerable.

Draghi wants government-guaranteed bonds with the full faith and credit of the eurozone. This means bonds will be issued with the full faith and credit of Germany. Germany is the paymaster. It always is. Like a rich uncle, Germany attracts ne'er-do-well cousins, who want to be put on the lifetime dole by Germany. They want to borrow from German banks and the German government. They want to avoid paying back principal, which they cannot do apart from hyperinflation. They want ever-larger cuts in interest rates and ever-larger welfare state spending. Aunt Angela is expected to fork over the money.

"WE BELIEVE!"

If Draghi had anything new to offer, he did not explain what it is. He has had a week to do so.

Stocks went up sharply the day after his remark, and they did not fall back for a week. This indicates that the investing world believed that he has a new plan, despite the absence of any evidence. They believed that the great discontinuity – the collapse of the euro – can and will be overcome by means of Draghi's plan.

What power does the ECB have? The power of money creation. There is no question that the ECB has this power. Just ask Angela Merkel. The ability of the ECB to inflate is the bone of contention between Merkel and Draghi.

The representatives of the comparatively solvent northern nations, which have export-driven economies, favor large trade surpluses. They are upset that the borrowers have borrowed far more than they can repay. Everyone knew that when the loans were made. There is never permanent repayment in a Keynesian, fractionally reserved universe.

Monetized debt cannot be paid back without a 99% contraction of the money supply (with a 1% reserve ratio). The central banks must replace paid-off debts with new ones. This is the ultimate lobster trap of debt. All central bankers have known this ever since at least 1900. Central banks' purchases of debt create the ultimate economic addiction. The investors believe that this will not happen. They believe that there will be no contraction of the money supply. If there were, this would create a replay of the Great Depression's first phase, 1930-33. Then it would further contract. Most banks would fail. Almost all IOUs would become worthless. No one could repay. That was why Congress created the FDIC in 1934: to stop the runs on banks, and therefore to stop the contraction of the money supply.

So, the investors believe that the ECB, the Federal Reserve, the Bank of Japan, the People's Bank of China, and all other central banks will take action, meaning money creation, to prevent any such scenario. But they also believe that there will not be hyperinflation. They believe in a middle path between hyperinflation and Great Depression 2.

So do central bankers. They believe that they can always avoid the two worst extremes. But the only factor preventing hyperinflation today is the unwillingness of commercial banks to lend the Western central banks' post-2007 monetary bases into circulation, multiplying through the banking system.

This factor could change. The central banks could make it change overnight by imposing fees on excess reserves held at the central banks. There would be a huge economic boom in commodities, but the price of this boom would be runaway consumer prices. That would be proof of defeat for central banks.

DRAGHI SPEAKS AGAIN!

On August 2, an hour before the U.S. stock markets opened, he gave a brief speech. He said that the ECB has no fixed plan. This had been the universal assessment of his critics for a week. His comment a week before had been rhetorical, not substantive.

Until he gave that speech, stock markets across Europe were up. Then they all dropped like a stone: straight down. It was as if they had fallen off a cliff. This was at 9 a.m.

Immediately, American stock futures reversed. The note of optimism that had marked the CNBC story at 6 a.m. was gone. Thirty minutes after Draghi's speech, the Dow Jones Industrial Average opened down over 130 points: 1%.

All of this intra-day trading is neither here nor there in the grand sweep of events. But what happened within just a few minutes indicates the extent of unwarranted faith in Draghi's words.

The eurozone is headed for many years of trouble, irrespective of Mr. Draghi's remarks. The ECB is trapped. It dares not inflate to the degree that Germany will pull out of the eurozone. Yet it dares not stabilize the money supply and refuse to buy the bonds issued by PIIGS. It must walk down that middle path.

That investors would respond in wild enthusiasm for one day to an off-the-cuff remarks by Draghi at a gathering of Big Shots indicates the utter credulity of investors.

That any article writer could believe that the euro is headed for a collapse, as distinguished from a slow decline of purchasing power in relation to foreign currencies, indicates that they do not understand monetary policy, nor do they think their readers do.

That either investors or journalists could believe that anything Draghi says is economically significant indicates the extent to which the world's capitalists and their salaried cheerleaders in the media have faith in central bank monetary inflation. What possible new idea could Draghi have brought to the table on the day the Olympics opened? What had he cleared with other senior members of the ECB? Nothing, as they said before the one-day boom in stocks was over. He had not discussed anything with them.

But what if he had? What if they had all agreed to make an announcement to the media, rather than to a group of famous party attendees? What difference would their announcement have made? None. A committee's announcement is filled with qualifications and hedges. This is why committees do not get invited to swank dinner parties thrown by senior politicians.

Of course, wild men don't get invited, either. Peter Schiff is not invited. I'm not invited. Surely Gerald Celente is not invited. Big Shots are afraid of loose cannons as much as they are bored by committee members.

THE CENTER DOES NOT HOLD

The monetary system grinds on. So do the capital markets. There is no collapse.

But at some point, the ECB senior committee and the Federal Open Market Committee composed of regional central bankers will have to fish or cut bait. They will have to inflate in order to keep the system moving upward rather than down the way it did in 1930-33 and again in 2008. They do not dare let the largest banks go under.

When Draghi said the ECB would do whatever it takes to save the eurozone, he had in mind big banks. This is what every central banker has in mind.

Draghi assumed that the politicians will fall in line. They always have before. He does not think times have changed.

But to move in the direction Draghi says is imperative means fiscal union imposed by frightened members of European national parliaments. He does not think for a moment that the voters should be allowed to decide this, for there will be more than one nation whose voters decide against fiscal union. The creation of a 17-member eurozone with power over each nation's budget will not be imposed by another treaty. It will be imposed by political fiat, a fiat that will be matched by central bank fiat money.

Can it hold? Can the elected legislators who impose this system retain their offices and thereby head off secession? I don't think so.

CONCLUSION

Draghi is just another former Goldman Sachs agent. He is whistling past the graveyard.

What is that graveyard? The graveyard designed almost a century ago by the consummate globalist of modern times, Jean Monnet. He is widely acknowledged as the designer of the New Europe.

His Wikipedia entry says:
In 1955, Monnet founded the Action Committee for the United States of Europe in order to revive European construction following the failure of the European Defense Community (EDC). It brought political parties and European trade unions together to become a driving force behind the initiatives which laid the foundation for the European Union as it eventually emerged: first the European Economic Community (EEC) (1958) (known commonly as the "Common Market"), which was established by the Treaty of Rome of 1957; later the European Community (1967) with its corresponding bodies, the European Commission and the European Council of Ministers, British membership in the Community (1973), the European Council (1974), the European Monetary System (1979), and the European Parliament (1979). This process reflected Monnet's belief in a gradualist approach for constructing European unity.


It adds this: "On 6 December 1963, Monnet was presented with the Presidential Medal of Freedom, with Special Distinction, by President Lyndon Johnson." This was 13 days after Johnson had become President. If you don't think this indicates the enormous power of Monnet, you do not understand Presidents' calendars.

The ECB is an extension of his power, a generation after his death. So is the European Union. So is the eurozone. Will they collapse? No. Will they slowly disintegrate? Yes. Why? Because the dream of political centralization in our day is the dream of central planning in every area of economic life. Central economic planning always produces disintegration.

Keynesians deny this. Keynesian investors put their money where their faith is. They are going to lose most of their money.

http://lewrockwell.com/north/north1182.html
 
Old August 4th, 2012 #2
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Overview on the origins of it. Minus the Jewish factor, naturally.



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Old August 8th, 2012 #4
Alex Linder
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Euro founder admits some nations may be forced to leave

One of the founding fathers of the euro admits that some states may be forced to abandon the single currency, but insists Germany would be better off staying in.
Otmar Issing believes Germany would be better off staying in the euro Photo: AFP

By Matthew Sparkes

08 Aug 2012

269 Comments

Otmar Issing, a former European Central Bank chief economist, warned that the eurozone could be heading towards fracture in a book called How we save the euro and strengthen Europe published this week .

"Everything speaks in favour of saving the euro area. How many countries will be able to be part of it in the long term remains to be seen," said Mr Issing in the book, which is written as a conversation between an economist and a journalist.

At no point did he explicitly refer to Greece, but the debt-stricken country has been hovering perilously close to default and an exit from the eurozone as it makes harsh spending cuts and tax hikes to appease the EU and ECB after receiving billions in bail-out payments.

"We are still a long way off saying 'that's it, now we are sure to make progress'. Substantial reforms in almost all countries are still pending," he added.

Mr Issing is one of the founding fathers of the euro, but also predicted potential problems with the plan and argued that political union ought to precede a shared currency to ensure its stability in the long-term. The economist has now said there is a case for some countries to leave the union in order to solve their own debt problems, but that Germany would do best to remain a member.

"Even in its short existence, the euro has been more stable than the mark", he said.

The German economist also played down the role that the central bank, his former employer, could have in solving the debt crisis, suggesting that countries needed to fix their own problems.

"There is no quick fix and anything in the direction of euro bonds or something similar would mean for me the end of the stability-oriented currency union.

"The less politicians address the root of the problems, the more they look with their expectations and demands to the ECB, which is not made for this. It is a central bank and not an institution to rescue governments threatened by bankruptcy. A central bank always also acts as a lender of last resort for the banking system - but it does not rescue governments," he said. "Exaggerated expectations alone can harm the prestige of the institution."

Earlier this week Jean-Claude Juncker, the leader of the eurozone finance ministers' group, also said the world could cope with Greece leaving the eurozone - but that it still holds dangers.

“From today’s perspective, it would be manageable but that does not mean it is desirable,” he said. “Because there would be significant risks, especially for ordinary people in Greece.”

Last month a survey conducted on behalf of the weekly magazine Bild am Sonntag showed that the majority of Germans believed that they would be better off without the euro. Of those taking part 51pc said that the country would be in a better position outside the eurozone, while 29pc said that it would be worse off.

http://www.telegraph.co.uk/finance/f...-to-leave.html
 
Old August 14th, 2012 #5
Alex Linder
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Could Germany save eurozone by leaving it?

By Clyde Prestowitz and John Prout, Special to CNN
May 30, 2012


(CNN) -- With Greece probably heading for an exit from the euro, the European and global economies may be facing disaster. However, there is still time for European leaders to reverse this destructive dynamic with one simple, outside-the-box solution: Instead of pushing Greece out of the eurozone, Germany should voluntarily withdraw and reissue its beloved deutsche mark.

The analysis of the problems of the euro and the European Union has long been upside down, focused on the debt and competitive weaknesses of the so-called peripheral countries (Greece, Italy, Spain, Portugal and Ireland) and especially of Greece. But issues of debt and competitiveness existed and were dealt with rather easily long before the euro arrived, through periodic devaluation of the currencies of the less-competitive countries against those of the more competitive countries, and especially against the deutsche mark.

The problem now is not the weaknesses of the periphery, it's the excessive competitive strength of Germany. Not only is the German economy inherently strong as a result of the high productivity of its workforce, its exports have added competitiveness because the euro is undervalued as far as Germany is concerned. Because it is the common currency of the eurozone countries, the value of the euro reflects the average of their combined competitiveness. But Germany's competitiveness is far above the average. So, for Germany, the euro is too weak. This is why Germany has been accumulating chronic trade surpluses on the scale of the Chinese.

As long as the rest of the eurozone countries are locked in the euro with Germany, the only way for them to become more competitive is to become, well, more Germanic, through austerity measures that cut government spending, reduce welfare budgets, cut wages and raise unemployment. This is, of course, what they have been doing for the past two years.

The aim has been to achieve export-led growth. But because Germany is so hypercompetitive and has been unwilling to stimulate its own economy to achieve higher consumption, its eurozone partners have not been able to increase exports to it and have had thus to compete with it in exporting to the likes of China and the United States.

That hasn't been working very well, and now the consequences of grinding austerity are beginning to tear the political and social fabric even of countries like the Netherlands, which until quite recently were enthusiastically echoing the German call for austerity and growth led by trade with countries outside the EU.

But it is not clear that the eurozone can sustain the social and political pain of austerity long enough and on the scale necessary to eventually achieve competitive parity with Germany.

The alternative is for Germany to revert to the deutsche mark. That would immediately result in appreciation of the German currency and competitive devaluation of the euro for the remaining eurozone countries. Germany would tend to buy more while selling less, and vice versa for the rest of the eurozone. The extra consumption that Germany will not deliver via stimulus policies would be automatically delivered by currency revaluation.

The single most essential element of a euro rescue has always been one form or another of a euro bond guaranteed jointly by all eurozone member countries. What the U.S. Treasury bond is to the U.S. economy, the euro bond would be to the EU. The main obstacle has been Germany's insistence that it would not guarantee payments on bonds for the benefit of other European countries.

German reversion to the deutsche mark would remove this obstacle, and with no further German opposition, the remainder of the eurozone could move ahead to establish a true euro bond, along with a unified treasury function to match the unified banking function of the European Central Bank.

Some may object that German backing would still be required for the eurozone and a euro bond to be viable. That is correct, and Germany would indeed remain committed to the eurozone for a number of reasons. It would need the eurozone more than ever to buy its increasingly expensive exports. The Bundesbank (Germany's central bank) would undoubtedly sell deutsche marks against euros to mitigate appreciation, and the resulting accumulation of euros would be invested in the new euro bonds. This in turn might inspire the European Central Bank to initiate quantitative easing programs that would stimulate the entire EU economy.

The cost to Germany of saving Europe will be a hit to exports and perhaps a temporary rise in unemployment, but a return to the deutsche mark would attract a flood of capital to Germany and thereby spur investment while holding interest rates and inflation down.

The real question is whether the cost of slower export growth and increased unemployment is less than that of paying for Greece, then Spain, etc. Somehow, the "unknown" risks of a German exit from the euro appear more manageable, more quantifiable and in some ways more familiar a challenge than endless austerity, social unrest and political polarization.

http://edition.cnn.com/2012/05/30/op...tml?hpt=ieu_r1
 
Old August 14th, 2012 #6
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Predictions and Forecasts - September, 2012 To March, 2013
Monday August 06, 2012 13:15


Nasty Political and Banker Mercenaries Transcend Reality.

Believabilty has gone out the window with these clowns as the public at large catches on to their game.
http://www.kitco.com/ind/Wieg_cor/20120806.html
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Old August 15th, 2012 #7
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[one view from Austria, where bigshot wants Austria out of 'zone]

AUSTRIA: 'Europe Can Only Function If Each Country Has Its Own Currency'

[...]

So as political revolts were breaking out left and right in Germany against—and for—endless bailouts of troubled Eurozone countries, Austria set off its own fireworks: Frank Stronach announced that he’d form a political party by the end of September for the national election in 2013—with the goal of pushing Austria out of the Eurozone.

He is the billionaire founder, Director, and Honorary Chairman of the Canadian automotive component maker Magna International that wanted to buy bleeding-to-death Opel from bankrupt GM in 2009. What raised some eyebrows at the time was the source of funding: Sberbank Rossii, a big Russian bank majority-owned by the Central Bank of Russia.

The fundamental principles of his party would be “truth, transparency, and fairness,” Stronach said in an interview. A core group of people was in place, the party platform was nailed down, though some polishing would still be required. “We’re against the crony economy in this country, we’re against corruption,” he said. There were elements of Ross Perot.

“Government is the management team of a country; unfortunately, this management team is made up of politicians.” Austria is “over-administered,” the fault of the government, not of civil servants. “I’ve always said there are no bad workers, only bad managers.” Europe, he added, should guarantee peace along with free movement of goods, people, services, and capital, “but Europe can only function if every country has its own currency.”

“Insolvency procrastination,” he’d called the ESM, the not yet existing bailout fund that is still hung up in the German Constitutional Court. If people in the private sector perpetrated a similar act, he said, they'd be “punished by imprisonment.” And time would be of the essence: “the sooner Austria gets rid of the euro,” he said, “the better for the Austrian people.”

He is well connected to the political and economic elite—despite his outburst against Austria’s “crony economy.” Unnamed prominent people and frustrated politicians of various stripes are expected to join him. Observers estimate that his party will obtain 10% or more of the vote in the national elections and will be able to enter parliament.

[...]

http://www.businessinsider.com/polit...urrency-2012-8
 
Old August 15th, 2012 #8
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What drives the resentment from across the pond and Britain .Is that in Germany they have a leader withthe " balls ",to not be hounded,into following policies that would destroy Germain economic might. In a futile attempt to use Germain resources to prop up the Eurozone.

...

I must say that the analogy to Weimar hyperinflation has been far overstretched by commentators from abroad. The hyperinflation is not really in our collective memory any longer. The resentment mainly comes from the fact that Germany just had undergone a lot of belt-tightening in the early 2000s ("sick man of Europe" etc.), and when everything finally was back on track ca. 2008, the world financial crisis hit and it became obvious that lots of other countries around the world, both inside and outside the Eurozone and Europe, did the exact opposite of Germans and spent like there was no tomorrow. So a common feeling is that others should go through some belt-tightening as well before they recieve any financial transfers from Germany.

Last edited by Alex Linder; August 15th, 2012 at 03:17 PM.
 
Old August 16th, 2012 #9
Alexander M.
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Editor’s Note:

The following text is from Ace of Swords, one of my favorite German websites, which has published translations of 63 Counter-Currents pieces. I am reprinting it at the request of Ace of Swords.

In an email to me, they explained that: “We are deeply worried that an intended by-product of the Euro ponzi scheme might be increased strife among the European peoples. The Germans, the Austrians, the Dutch etc. are angry because their tax money is taken away, seemingly to the benefit of other countries like Greece, Spain, Portugal etc., and some just like to cling to the notion that all this is a ‘French’ thing to get a Versailles without war. At the same time the Spanish, the Greek and others are told by their ‘national’ media as well as by the New York Times that all this is a ‘German’ plan to rob them of their money and their property.”


http://www.counter-currents.com/2012...all-europeans/
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Old August 16th, 2012 #10
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Germany, the Scapegoat of Europe
08/16/2012

The more Germany tries to save the Eurozone, the more it become the union's scapegoat. The best response: ignore the populists, and keep on trucking.

We Germans like to see ourselves as Europe's rescue patrol. But the more influential Germany becomes and the more responsibility it shoulders, the stronger the headwind it encounters. Germany is facing a tough path ahead: it must be willing to contribute to the European sacrifice without reaping any sympathies in return. Germany is Europe's scapegoat.

In late 2011, Poland's foreign minister Radoslav Sikorski said something that you wouldn't necessarily expect from a Polish politician: "I am less scared of German power than I am scared of German inactivity." This summer, the former German Chancellor Helmut Schmidt opined: "The murder of six million Jews remains such a strong ballast on the unconscious of the peoples of Europe that it precludes German leadership even today." Both men know what they are talking about, yet they contradict each other. Can we reconcile their views?

When the realist looks out into the world, he searches for balance. Not a desire for harmony drives his outlook, but his conviction that tensions will rise unless the power dynamics between states are carefully kept in balance. The logic of the Cold War hasn't lost its persuasiveness just because the Iron Curtain collapsed, and we must discuss what kind of balance remains important today. One thing seems certain: when the balance of power shifts in a region, political consequences are unavoidable.

Europe is losing its balance

In Europe, power relations have shifted since the beginning of the economic crisis, and they continue to shift as the debt crisis drags on. Europe is losing its balance. At first sight, Germany finds itself in a rather comfortable position: we are less affected by the crisis than many of our neighbors and experience a relative increase in economic potency, wealth, and power.

Sikorski's demand for German leadership thus makes sense. The strongest member of the party must take the helm; Germany must pick up the baton. But as Schmidt reminds us, Germany cannot act as it should. Its European neighbors don't want to be led from Berlin.

The statements of the two politicians thus illustrate Germany's bind: some countries -- especially the nations of southern Europe: Spain, Italy, and Greece -- face harsh financial and fiscal cuts. Germany's power increases as their influence dwindles. Concerns are rising among the governments of the austerity-stricken members of the Eurozone.

But the true danger is to be found in domestic politics. For years, politicians in Europe have been playing a risky game that has always been rigged against their common union: positive changes were claimed by policy-makers (in Germany, too) as their own achievements while the EU was held responsible for everything that went bad. Today, the scapegoat role is increasingly held by Germany. When European heads of state return home from their summits, they hand out little policy carrots while declaring (to their own voters) that they are powerless to resist the stick-wielding Germans.

Germany isn't free of populism either

In last week's edition of Der Spiegel, Italy's Prime Minister Mario Monti warned against "rising resentments" in his home country: against the Euro, against Germany, and against chancellor Merkel. She must shoulder much of current criticism -- the Italian newspaper Il Giornale just added another chapter to the long list of Hitler references. Many countries have taken to blaming Mrs. Merkel for everything they disagree with.

Populists around Europe are breathing down our necks. The longer the crisis continues, the bigger the imbalance between Germany and its neighbors will grow, and the easier it will be to stoke fears and prejudices. Once you've been cast as the scapegoat, it's hard to escape that role.

Germany isn't free of populism either. Markus Söder, finance minister from the Bavarian state government, recently made headlines with the ludicrous demand that Germany must make an example of Greece. He doesn't specify what that might look like, but his words reveal a rather rudimentary and questionable understanding of German history and democracy.

Let's hope that Söder has listened to the warning words of Chancellor Schmidt: we cannot discount the historical dimension of current debates. Whether we like it or not, Germany continues to shoulder the burden of its past. Schmidt's criticism is that Chancellor Merkel lacks a finely tuned awareness for such latent sentiments, and the polls seem to reflect that: while Merkel continues to score high on domestic approval ratings, she is becoming increasingly unpopular throughout Europe. She has made mistakes, among them her open support for the former French president Sarkozy. A bit of historical awareness could have helped her avoid the faux-pas: never before has a German chancellor meddled openly with French electoral politics.

Disliked (or even hated) savior of Europe

The consequence: Mrs. Merkel is now alone at Europe's helm, or at least she is perceived that way. When Sarkozy was still in power, she could rely on commiserating photo ops, but François Hollande or Mario Monti are unwilling to play along. The Franco-German "Merkozy" duo was quickly replaced by Merkel, who now has the spotlight (and the burden) all to herself. Her hard stance -- primarily motived by domestic electoral concerns -- significantly contributes to that.

Germany increasingly finds itself along on the European stage, surrounded by other countries who point their fingers at Mrs. Merkel. It's unlikely that the German position will change in the near future, regardless of what happens to the Eurozone. And again, we've arrived at the German predicament: when we sacrifice something for the good of Europe, other states will claim the successes as their own. When we draw lines in the sand and issue demands, populists and demagogues raise their voices against us.

We must foremost resist the tendency to retreat to the politics of resentment ourselves. It's better to shrug and refuse to listen to vocal populists like Mr. Söder. The best we can hope for is to retain our role as the disliked (or even hated) savior of Europe.

http://www.huffingtonpost.com/the-eu...b_1790316.html
 
Old August 17th, 2012 #11
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Default Finland prepares for expected euro zone break up

European leaders must prepare for the looming break up of the euro zone, Finland's foreign minister, Erkki Tuomioja, said in the Daily Telegraph on Friday.

Tuomioja said Finnish officials have prepared for the break up of the single currency with an "operational plan for any eventuality."

"There are no rules on how to leave the euro, but it is only a matter of time. Either the south or the north will break away because this currency straitjacket is causing misery for millions and destroying Europe's future," Tuomioja is quoted as saying.

"It is a total catastrophe. We are going to run out of money the way we are going. But nobody in Europe wants to be first to get out of the euro and take all the blame," he said.

Tuomioja, a veteran minister in one of the euro zone's four AAA-rated countries, said the break up of the euro could make the European Union stonger.

"It is not something that anybody is advocating in Finland, let alone the government. But we have to be prepared. The break up of the euro does not mean the end of the European Union. It could make the EU function better," he said.

Finland, which has a veto that could be used to block any new bailout measures, has insisted on collateral from both Greece and Spain in exchange for rescue loans.

http://in.reuters.com/article/2012/0...8JGE3420120816

How?
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Old August 17th, 2012 #12
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[long very interesting story well worth reading by Michael Lewis about Ireland. The government guarantees, the banksters speculate and fail, the people bail out the bankers. Capitalism gets the blame, while swindler-socialism is the problem.]

When Irish Eyes Are Crying

First Iceland. Then Greece. Now Ireland, which headed for bankruptcy with its own mysterious logic. In 2000, suddenly among the richest people in Europe, the Irish decided to buy their country—from one another. After which their banks and government really screwed them. So where’s the rage?

When I flew to Dublin in early November, the Irish government was busy helping the Irish people come to terms with their loss. It had been two years since a handful of Irish politicians and bankers decided to guarantee all the debts of the country’s biggest banks, but the people were only now getting their minds around what that meant for them. The numbers were breathtaking. A single bank, Anglo Irish, which, two years before, the Irish government had claimed was merely suffering from a “liquidity problem,” faced losses of up to 34 billion euros. To get some sense of how “34 billion euros” sounds to Irish ears, an American thinking in dollars needs to multiply it by roughly one hundred: $3.4 trillion. And that was for a single bank. As the sum total of loans made by Anglo Irish, most of it to Irish property developers, was only 72 billion euros, the bank had lost nearly half of every dollar it invested.

The two other big Irish banks, Bank of Ireland and, especially, Allied Irish Banks (A.I.B.), remained Ireland’s dirty little secrets. Both older than Ireland itself (the Bank of Ireland was founded back in 1783; A.I.B. is made up of three banks founded in the 19th century), both were now also obviously bust. The Irish government owned big chunks of the two ancient banks but revealed less about them. As they had lent vast sums not only to Irish property developers but also to Irish homebuyers, their losses were also obviously vast—and similar in spirit to the losses at the upstart Anglo Irish.

Even in an era when capitalists went out of their way to destroy capitalism, the Irish bankers set some kind of record for destruction. Theo Phanos, a London hedge-fund manager with interests in Ireland, says that “Anglo Irish was probably the world’s worst bank. Even worse than the Icelandic banks.”

Ireland’s financial disaster shared some things with Iceland’s. It was created by the sort of men who ignore their wives’ suggestions that maybe they should stop and ask for directions, for instance. But while Icelandic males used foreign money to conquer foreign places—trophy companies in Britain, chunks of Scandinavia—the Irish male used foreign money to conquer Ireland. Left alone in a dark room with a pile of money, the Irish decided what they really wanted to do with it was to buy Ireland. From one another. An Irish economist named Morgan Kelly, whose estimates of Irish bank losses have been the most prescient, made a back-of-the-envelope calculation that puts the losses of all Irish banks at roughly 106 billion euros. (Think $10 trillion.) At the rate money currently flows into the Irish treasury, Irish bank losses alone would absorb every penny of Irish taxes for at least the next three years.

http://www.vanityfair.com/business/f...urrentPage=all

Last edited by Alex Linder; August 17th, 2012 at 12:41 PM.
 
Old August 17th, 2012 #13
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The Irish construction industry had swollen to become nearly a quarter of the country’s G.D.P.—compared with less than 10 percent in a normal economy—and Ireland was building half as many new houses a year as the United Kingdom, which had almost 15 times as many people to house.

...

Kelly wrote his second newspaper article, more or less predicting the collapse of the Irish banks. He pointed out that in the last decade they and the economy had fundamentally changed. In 1997 the Irish banks were funded entirely by Irish deposits. By 2005 they were getting most of their money from abroad. The small German savers who ultimately supplied the Irish banks with deposits to re-lend in Ireland could take their money back with the click of a computer mouse. Since 2000, lending to construction and real estate had risen from 8 percent of Irish bank lending (the European norm) to 28 percent. One hundred billion euros—or basically the sum total of all Irish public bank deposits—had been handed over to Irish property developers and speculators. By 2007, Irish banks were lending 40 percent more to property developers than they had to the entire Irish population seven years earlier. “You probably think that the fact that Irish banks have given speculators €100 billion to gamble with, safe in the knowledge that taxpayers will cover most losses, is a cause of concern to the Irish Central Bank,” Kelly wrote, “but you would be quite wrong.”

...

It wasn’t until almost exactly one year later, on September 29, 2008, that Morgan Kelly became the startled object of popular interest. The stocks of the three main Irish banks, Anglo Irish, A.I.B., and Bank of Ireland, had fallen by between a fifth and a half in a single trading session, and a run on Irish bank deposits had started. The Irish government was about to guarantee all the obligations of the six biggest Irish banks. The most plausible explanation for all of this was Morgan Kelly’s narrative: the Irish economy had become a giant Ponzi scheme and the country was effectively bankrupt. But it was so starkly at odds with the story peddled by Irish government officials and senior Irish bankers—that the banks merely had a “liquidity” problem and that Anglo Irish was “fundamentally sound”—that the two could not be reconciled. The government had a report thrown together by Merrill Lynch, which declared that “all of the Irish banks are profitable and well capitalised.” The difference between this official line and Kelly’s was too vast to be split. You believed either one or the other, and until September 2008, who was going to believe this guy holed up in his office wasting his life writing about the impact of the Little Ice Age on the English population? “I went on TV,” says Kelly. “I’ll never do it again.”

...

I spend an hour with Joan Burton. Of the major parties in Ireland, Labour offers the closest thing to a dissenting opinion and a critique of Irish capitalism. As one of only 18 members of the Dáil who voted against guaranteeing the banks’ debts, Burton retains rare credibility. And in an hour of chatting about this and that, she strikes me as straight, bright, and basically good news. But her role in the Irish drama is as clear as Morgan Kelly’s: she’s the shrill mother no one listened to. She speaks in exclamation points with a whiny voice that gets on the nerves of every Irishman—to the point where her voice is parodied on national radio. When I ask her what she would do differently from what the Irish government is doing, even she is stumped. Like every other Irish politician, she is now at the mercy of forces beyond her control. The Irish bank debt is now Irish government debt, and any suggestion of default will only raise the cost of borrowing the foreign money they now can’t live without.

...

The commercial-real-estate loan market is generally less transparent than the market for home loans. Deals between bankers and property developers are one-offs, on terms unknown to all but a few insiders. The parties to any loan always claim it is prudent: a bank analyst has little choice but to take them at their word. But Ingram was skeptical of the Irish banks. He had read Morgan Kelly’s newspaper articles and even paid Kelly a visit in his university office. To Ingram’s eyes, there undoubtedly appeared to be a vast difference between what the Irish banks were saying and what was really happening. To get at it he ignored what they were saying and went looking for knowledgeable insiders in the commercial-property market. He interviewed them, as a journalist might. On March 13, 2008, six months before the Irish real-estate Ponzi scheme collapsed, Ingram published a report, in which he simply quoted verbatim what British market insiders had told him about various banks’ lending to commercial real estate. The Irish banks were making far riskier loans in Ireland than they were in Britain, but even in Britain, the report revealed, they were the nuttiest lenders around: in that category, Anglo Irish, Bank of Ireland, and A.I.B. came, in that order, first, second, and third.

For a few hours the Merrill Lynch report was the hottest read in the London financial markets, until Merrill Lynch retracted it. Merrill had been a lead underwriter of Anglo Irish’s bonds and the corporate broker to A.I.B.: they’d earned huge sums of money off the growth of Irish banking. Moments after Phil Ingram hit the Send button on his report, the Irish banks called their Merrill Lynch bankers and threatened to take their business elsewhere. The same executive from Anglo Irish who had called to scream at Morgan Kelly called a Merrill research analyst to scream some more. Ingram’s superiors at Merrill Lynch hauled him into meetings with in-house lawyers, who toned down the report’s pointed language and purged it of its damning quotes from market insiders, including its many references to Irish banks. And from that moment everything Ingram wrote about Irish banks was edited, and bowdlerized by Merrill Lynch’s lawyers. At the end of 2008, Merrill fired him.

...

Ian turns out to have a good feel for what I, or anyone else, might find interesting in rural Ireland. He will say, for example, “Over there, that’s a pretty typical fairy ring,” and then explain, interestingly, that these circles of stones or mushrooms that occur in Irish fields are believed by local farmers to house mythical creatures. “Irish people actually believe in fairies?,” I ask, straining but failing to catch a glimpse of the typical fairy ring to which Ian has just pointed. “I mean, if you walked right up and asked him to his face, ‘Do you believe in fairies?’ most guys will deny it,” he replies. “But if you ask him to dig out the fairy ring on his property, he won’t do it. To my way of thinking, that’s believing.” And it is. It’s a tactical belief, a belief that exists because the upside to disbelief is too small, like the former Irish belief that Irish land prices would rise forever.

...

We pass wet green fields carved by potato farmers into small plots, and every now and then a small village, but even the inhabited places feel desolate. The Irish countryside remains a place people flee. Among its drawbacks, from the outsider’s point of view, is the weather. “It’s always either raining or about to rain,” says Ian. “I drove a black guy from Africa around the country once. It’s raining the whole time. He says to me, ‘I don’t know why people live here. It’s like living under an elephant.’ ”

...


Which way entire nations jumped when the money was made freely available to them obviously told you a lot about them: their desires, their constraints, their secret sense of themselves. How they reacted when the money was taken away was equally revealing. In Greece the money was borrowed by the state: the debts are the debts of the Greek people, but the people want no part of them. The Greeks already have taken to the streets, violently, and have been quick to find people other than themselves to blame for their problems: monks, Turks, foreign bankers. Greek anarchists now mail bombs to Angela Merkel and hurl Molotov cocktails at their own police. In Ireland the money was borrowed by a few banks, and yet the people seem not only willing to repay it but to do so without a peep of protest.

...


Two things strike every Irish person when he comes to America, Irish friends tell me: the vastness of the country, and the seemingly endless desire of its people to talk about their personal problems. Two things strike an American when he comes to Ireland: how small it is and how tight-lipped. An Irish person with a personal problem takes it into a hole with him, like a squirrel with a nut before winter. He tortures himself and sometimes his loved ones too. What he doesn’t do, if he has suffered some reversal, is vent about it to the outside world. The famous Irish gift of gab is a cover for all the things they aren’t telling you.

...

In the months after Lenihan’s bank bailout, Keogh began to pay attention to the behavior of Irish bankers. His own shares in A.I.B., once thought to be as sound as cash or gold, were rapidly becoming worthless. But the bank’s executives exhibited not the first hint of remorse or shame. A.I.B. chairman Dermot Gleeson and C.E.O. Eugene Sheehy troubled Keogh the most. “The two of ’em stood up, time and again, and said, ‘Our bank is 100 percent sound,’ ” he says. “As if nothing at all was the matter!” He set out to learn more about these people in whom he had always placed blind trust. And what he found—high pay, corporate boondoggles—outraged him further. “The chairman paid himself 475,000 [euros] to chair 12 meetings!” Keogh still shouts.

W
hat Keogh learned remains both the most shocking and the most familiar aspect of the Irish catastrophe: how easily ancient financial institutions abandoned their traditions and principles. An upstart bank, Anglo Irish, had entered their market and professed to have found a new and better way to be a banker. Anglo Irish made incredibly quick decisions: an Irish property developer who was an existing client could walk into its office in the late afternoon with a new idea and walk out with a commitment of hundreds of millions of euros that night. Anglo Irish was able to shovel money out its door so quickly because it had turned banking into a family affair: if they liked the man, they didn’t bother to evaluate his project. Precisely the problem that plagues WN: if they like someone (Jared Taylor), they don't worry that his politics are unsound. This will lead fool-WN to the same end the feckless Irish bankers have achieved.
 
Old August 23rd, 2012 #14
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[from OD. good example of 'principles protect people.' or don't, if you don't follow them. WN should take note]

Rudel says:
August 23, 2012 at 9:55 pm

At the inception of the Euro no country was supposed to be allowed to run a deficit higher than 3% of GDP. That rule wasn’t enforced. Result: disaster.
 
Old August 25th, 2012 #15
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Germans hold better opinion of Ireland than other EU bailout states

Germans are much more favourably disposed to Ireland than to any of the other EU bailout countries, according to a poll carried out for The Irish Times in both countries.

The poll found a big majority of Irish people believed Germany was doing at least enough to protect the euro zone.

The unique poll was carried out by Ipsos MRBI in Germany and Ireland by telephone earlier this month. It was conducted against the background of the ongoing euro zone crisis and the pivotal role Germany will play in determining if Ireland will get further relief on its banking debt. The poll was carried out among a representative sample of 1,000 people in each country.

German respondents had a broadly positive attitude to Ireland, with just 3 per cent of them wanting us out of the EU and a majority believing Irish people worked longer hours than they do.

Asked to assess how Germany was responding to the euro zone crisis, 52 per cent of Germans said their country was doing too much; 36 per cent said they were doing just enough, 6 per cent said not enough and 6 per cent had no opinion.

On the bailout countries, 46 per cent of Germans felt Ireland was trying hard to fix its economy, 23 per cent said we should try harder and the remainder had no opinion.

By contrast, 13 per cent of Germans felt Greece was trying hard, 78 per cent felt it should try harder and 9 per cent had no opinion.

The other two bailout countries came in between. On Portugal, 32 per cent of Germans said the country was trying hard, 45 per cent said it should try harder and 23 per cent had no opinion. On Spain, 31 per cent said it was trying hard, 56 per cent said it should try harder and 13 per cent had no opinion.

Asked which, if any, of the bailout countries they felt should leave the European Union, 3 per cent said Ireland, 5 per cent said Portugal and Spain and 42 per cent said Greece.

A total of 49 per cent of German respondents said none of the bailout countries should leave the EU, while 8 per cent had no opinion.

Asked a series of questions on how they compared Ireland to Germany, 86 per cent felt Germany had a stronger economy. However, 38 per cent felt Irish people worked longer hours compared to 32 per cent who felt Germans worked longer hours, while 14 per cent believed both nationalities worked the same hours.

The poll forms part of an Irish Times series which begins today examining the unique relationship between Ireland and Germany. The series, which also runs next week examines how the two countries have become entwined like never before.

On the issue of tax, 45 per cent felt Ireland had lower taxes for workers while 11 per cent said Germany had lower taxes, while 12 per cent thought they were the same.

There was a similar view of taxes on business, with 47 per cent saying they were lower in Ireland, 11 per cent saying they were lower in Germany and 10 per cent the same.

On public sector salaries, 37 per cent felt they were higher in Germany, 18 per cent said they were higher in Ireland and 13 per cent said they were equal.

When the same questions were asked of Irish people, the response was similar on a number of issues.

Asked to assess the German response to the euro crisis, 44 per cent of Irish respondents said it was doing just enough, 20 per cent said it was being asked to do too much, 24 per cent said not enough and 11 per cent did not know.

On the performance of bailout states, 64 per cent said Ireland was trying hard while 35 per cent said we should be trying harder. Just 1 per cent had no opinion.

On Greece, 24 per cent of Irish people said it was trying hard and 69 per cent said it should try harder.

On Portugal, 40 per cent said it was trying hard and 41 per cent said it should try harder. On Spain, 38 per cent said it was trying hard and 51 per cent said it should try harder.

On whether any of these states should leave the EU, 34 per cent said Greece, 9 per cent Ireland, 5 per cent Portugal, 4 per cent Spain and 51 per cent said none should leave.

http://www.irishtimes.com/newspaper/...breaking3.html
 
Old August 25th, 2012 #16
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Aside from the obvious fact that the EU is anti-white, the biggest mistake was allowing Eastern European and Balkan countries to join. It should have stayed strictly in Western and Northern Europe... Now we are paying for the stupidity of other countries while we get flooded with Eastern Europeans.
 
Old August 25th, 2012 #17
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Text of jew Soros speech

[...]

The process of integration was spearheaded by a small group of far sighted statesmen who practiced what Karl Popper called piecemeal social engineering. They recognized that perfection is unattainable; so they set limited objectives and firm timelines and then mobilized the political will for a small step forward, knowing full well that when they achieved it, its inadequacy would become apparent and require a further step. The process fed on its own success, very much like a financial bubble. That is how the Coal and Steel Community was gradually transformed into the European Union, step by step.

Germany used to be in the forefront of the effort. When the Soviet empire started to disintegrate, Germany’s leaders realized that reunification was possible only in the context of a more united Europe and they were willing to make considerable sacrifices to achieve it. When it came to bargaining they were willing to contribute a little more and take a little less than the others, thereby facilitating agreement. At that time, German statesmen used to assert that Germany has no independent foreign policy, only a European one.

The process culminated with the Maastricht Treaty and the introduction of the euro. It was followed by a period of stagnation which, after the crash of 2008, turned into a process of disintegration. The first step was taken by Germany when, after the bankruptcy of Lehman Brothers, Angela Merkel declared that the virtual guarantee extended to other financial institutions should come from each country acting separately, not by Europe acting jointly. It took financial markets more than a year to realize the implication of that declaration, showing that they are not perfect.

The Maastricht Treaty was fundamentally flawed, demonstrating the fallibility of the authorities. Its main weakness was well known to its architects: it established a monetary union without a political union. The architects believed however, that when the need arose the political will could be generated to take the necessary steps towards a political union.

But the euro also had some other defects of which the architects were unaware and which are not fully understood even today. In retrospect it is now clear that the main source of trouble is that the member states of the euro have surrendered to the European Central Bank their rights to create fiat money. They did not realize what that entails – and neither did the European authorities. When the euro was introduced the regulators allowed banks to buy unlimited amounts of government bonds without setting aside any equity capital; and the central bank accepted all government bonds at its discount window on equal terms. Commercial banks found it advantageous to accumulate the bonds of the weaker euro members in order to earn a few extra basis points. That is what caused interest rates to converge which in turn caused competitiveness to diverge. Germany, struggling with the burdens of reunification, undertook structural reforms and became more competitive. Other countries enjoyed housing and consumption booms on the back of cheap credit, making them less competitive. Then came the crash of 2008 which created conditions that were far removed from those prescribed by the Maastricht Treaty. Many governments had to shift bank liabilities on to their own balance sheets and engage in massive deficit spending. These countries found themselves in the position of a third world country that had become heavily indebted in a currency that it did not control. Due to the divergence in economic performance Europe became divided between creditor and debtor countries. This is having far reaching political implications to which I will revert.


[...]

http://www.businessinsider.com/full-...-speech-2012-6
 
Old August 25th, 2012 #18
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The process of disintegration was spearheaded by a small group of short-sighted kykes who practiced what Karl Marx facetiously called piecemeal social engineering.

In retrospect it is now clear that the main source of trouble is that the member states of the euro have surrendered to the Jewish Central Wank their rights to create fiat money

Last edited by Rick Ronsavelle; August 25th, 2012 at 02:56 PM.
 
Old September 6th, 2012 #19
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[wrong move]

Central Bank to Snap Up Debt, Saying, ‘Euro Is Irreversible’
Johannes Eisele/Agence France-Presse — Getty Images

Mario Draghi, the European Central Bank chief, in Frankfurt on Thursday.
By JACK EWING and MELISSA EDDY

FRANKFURT — The European Central Bank on Thursday announced a sweeping program for buying the bonds of troubled euro zone countries, giving the bank potentially unprecedented power.

While the bank’s president, Mario Draghi, insisted that the central bank was not violating a prohibition on its financing governments, it was effectively becoming lender of last resort to countries as well as banks.

“We will have a fully effective backstop to avoid destructive scenarios with potentially severe challenges for price stability in the euro area,” Mr. Draghi said during a news conference. “The euro is irreversible.” Translation: we will print money until the cows come home, and end up in the same position as America

Germany’s chancellor, Angela Merkel, affirmed after a meeting with the Spanish prime minister, Mariano Rajoy, in Madrid on Thursday that the central bank acted “with independence and within the framework of its mandate.” But in fact, Germany’s Bundesbank was the lone vote against the central bank’s bond plan, arguing that it was “tantamount to financing governments by printing banknotes.” Yep. Looks like the Anglo-Jewish idea of finance is going to win the day, much to the detriment of average people across Europe

The program was designed to reduce the borrowing costs of Spain and Italy, to help them roll over their debts and get their economies moving again after two years of crisis. But such aid would not be automatic.

In essence, the central bank left the next step to the beleaguered governments. They would be required to ask the central bank formally to start buying their bonds in the open market and would have to agree to follow detailed conditions for paying down their debt and hewing to fiscal discipline.

While such programs will be overseen by other European Union governments, it would ultimately be up to the central bank to determine whether the terms of the agreement were acceptable, and whether the government was meeting those conditions over time.

By forcing governments to impose fiscal discipline on each other and remake their economies along lines dictated by the European Central Bank, power will inevitably drift from national capitals to Frankfurt, where the central bank is based, and Brussels, the administrative seat of the European Union.

http://www.nytimes.com/2012/09/07/bu...pagewanted=all
 
Old September 6th, 2012 #20
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14.45 Mats Persson, director of Open Europe:

Bailouts – whether by government or the ECB – can, at best, buy time. At worst, however, they act as an outright disincentive for necessary reforms. This risk was eloquently highlighted by Professor Leszek Balcerowicz – former Polish Finance Minister (and central bank head), famous for implementing the Polish structural reform plan following the fall of communism – at an Open Europe event last week.

"All bailouts, he said, come with "moral hazard". But if mishandled, ECB bond-buying could actually turn out to be the worst form of Eurozone bailout, as it completely de-links the bailout cash from reforms needed, creating a moral hazard problem of massive proportions (in addition to creating a number of other problems such as undermining the rule of law and making ECB susceptible to political influences). We’ve seen the signs already. As ECB board member Jörg Asmussen noted recently, "There cannot be a repeat of the mistakes with Italy in the summer of last year, when the ECB bought Italian sovereign bonds and the time was unfortunately not used for necessary adjustment measures".
 
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